Mumbai: In a move that may hamper operations at Jawaharlal Nehru Port, the country’s biggest container port, crane maker IMPSA (Malaysia) SDN BHD has backed out of a contract to provide three mammoth cranes worth more than Rs100 crore.
These so-called super post-panamax size rail-mounted quay cranes, or RMQCs—installed in the berths of ports and moved on specially made tracks—are vital for loading and discharging container cargo from and to ships at ports.
“They have informed us they cannot deliver the crane on time and want to revise the price upward, for which the port needs further government approvals,” said S.S. Hussain, chairman of JN Port.
“There is a penal provision for breaching the contract. Though we will take action against the Malaysian company, we will also explore the option of hiring such big cranes to replace some older ones at the port.”
A person close to the development, who did not want to be identified, said the Malaysian company is facing a financial crisis and going through a restructuring.
Mint couldn’t immediately reach IMPSA executives and couldn’t independently ascertain the reasons for the pullback. Port authorities said they have written to IMPSA seeking reasons for their backing out of the deal.
JN Port could see serious container handling backlogs from this decision. The contract was awarded early last year and the cranes were to be delivered by May or June, before the monsoons set in.
“Container backlog has already started way before the monsoons. With frequent breakdowns of old RMQCs at the container terminal, the monsoon is going to be a time of congestion,” said a shipper on condition that he would not be identified.
The port handles 60% of the country’s container cargo. It handled 4.06 million twenty-foot equivalent (TEU) containers in fiscal 2007-08, against 3.30 million units in 2006-07, registering a 23% growth. The standard size (length) of a container is 20ft and TEU is an accepted measure of capacity in the business.
JN Port, which has eight similar cranes, was planning to position the three new cranes at its main container terminal berth. It also planned to move two 19-year-old cranes to a smaller terminal where small-sized vessels call.
“This backout will help JN Port pocket around Rs8 crore by exercising its penalty options against IMPSA, but the port is back to square one. It will have to restart the procedure of taking approval from the board and the innumerable committees of the Union government,” said an executive of a shipping line that uses the port’s services extensively. He didn’t want to be named.
“This will also delay the proposed mechanization of shallow berth, wherein they were planning to install two big cranes to handle slightly bigger vessels.” The shipping line executive also said the decision by the Malaysian crane maker would result in the port losing out to private terminals, operated by DP World and the Container Corp. of India Ltd and Maersk AS. The rival and private terminals at JN Port have eight cranes each, which are relatively new.
The collapse of the deal comes when JNPT’s own container terminal has registered a negative growth of 3.81% even as the trade through this port has grown by 23%.
“JNPT is celebrating glory under the success of its private terminals. The private terminals have grown at the cost of JNPT’s container terminal’s business loss, that is owing to old equipment and delayed expansions. The state-run terminal’s crane productivity has come down to 17 moves per hour compared with 17.8. This has happened mainly because of ignorance of ministry of shipping and lapse of time in inviting tenders for cranes,” claimed a shipping line representative who is using all three terminals, including JNPT.
“The key positions at JNPT were filled only after year and nobody really bothered to send a expert team to monitor crane’s manufacturing schedules with Malaysian company,” he claimed.
“JNPT was late by at least six years in replacing its quay cranes. The port is now trying to satisfy with conservative growth projections in order to mitigate the delayed crane procurement. The port could have handled easily close to 5 million container units instead of 4.06 million units.”